Recession weighs heavily on Portuguese voters

[September 26, 2009]  LISBON, Portugal (AP) -- Recession weighed heavily on Portuguese voters' minds ahead of parliamentary elections on Sunday that polls indicated would return the incumbent Socialist Party to power.

The center-left Socialists want to spend their way out of the slump with big-ticket public works they say will create jobs and stimulate the economy.

The main opposition, center-right Social Democratic Party, says the bill for that plan is too high and will overload the country with debt for decades. It prefers to encourage private investment, partly through tax breaks.

Saturday was an official day of reflection when campaigning and opinion polls are forbidden. Some 9.4 million people are eligible to vote Sunday, with complete results coming later that night.

Two opinion polls Friday both indicated victory for Portugal's Socialist Party, with 38 percent to 30 percent for the Social Democrats.

With neither of Portugal's two main parties expected to collect more than half the seats in the 230-seat Parliament, the winner may rule as a minority government or seek an alliance or a coalition with one of the smaller parties - the conservative Popular Party, the Communist Party/Green Party coalition or the Left Bloc.

Only one minority government has survived its full term since democracy was introduced 33 years ago. Before the 2005 Socialist win, Portugal had three governments in three years.

A close result could consign Portugal to political uncertainty just as it needs to find a path to economic growth.

Portugal's economy contracted 3.7 percent in the second quarter compared with the same period last year. The jobless rate has jumped from 7.9 percent to a 20-year high of 9.1 percent, with some 500,000 people out of work.

Portugal, a country of 10.6 million, is western Europe's poorest country despite receiving billions in European Union development aid since joining the bloc in 1986. It was one of the founding members of the euro currency now used by 16 nations.

Both the main parties back reforms to make the labor market more flexible, such as making it easier to hire and fire workers, and agree on the need to diversify the economy as traditional industries such as textiles and fishing shed jobs.

Socialist leader and Prime Minister Jose Socrates, a 52-year-old former civil engineer, has blamed the global meltdown for Portugal's woes and says his social and economic reforms will eventually pay dividends.

The Socialists are ready to spend euro5 billion ($7.3 billion) on a new Lisbon airport, euro3 billion ($4.4 billion) on a bullet train link to Spain and euro1.7 billion ($2.5 billion) on a road and rail bridge across the River Tagus at Lisbon.

Socrates' reforms have enraged trade unions, though, and he is unlikely to repeat his 2005 landslide win.

His government has cut public sector benefits such as special health care provisions, raised the civil service retirement age from 60 to 65 and introduced an evaluation system for teachers. Those changes brought strikes and street demonstrations.

Social Democrat leader Manuela Ferreira Leite calls the reforms "a sham" because they failed to tackle the country's real problems. Ferreira Leite is the first woman leader of a political party in Portugal and is aiming to become the country's first elected woman prime minister.

[Associated Press; By BARRY HATTON]

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